On July 28, 2016, Oracle announced it had offered to purchase NetSuite for $9.3 billion USD. Some days ago, November 7th, Oracle Board announced to have obtained 53% of adhesions to its offer.
Both companies provide business applications that help automate operations in various areas, mainly finance and human resources, which are collectively called enterprise-resource planning (ERP).
The deal values NetSuite at $109 a share, a 21% premium with respect to NetSuite’s Friday 4th November closing at $90.34 per share.
The NetSuite’s acquisition will boost Oracle’s cloud-computing offerings, a market segment where the company has been struggling and is racing to expand its services. Furthermore, Oracle expects the acquisition will enable the company to support customers of any size in more industries and more countries.
Listed on the New York Stock Exchange (NYSE: N), NetSuite became a public company in 2007 and has now a market cap of 7.360.
In 1998, NetSuite pioneered the Cloud Computing revolution, establishing the world’s first company dedicated to delivering business applications over the Internet. Today, NetSuite provides a suite of cloud-based services generally grouped under the name of Enterprise Resource Planning (ERP) that run the business of more than 30,000 institutions in more than one hundred countries. It is indeed the global leading provider of cloud-based business management software.
Also listed on the New York Stock Exchange Oracle Corporation is a large player in the computer technology business. With a current market capitalization of $47.3Bn Oracle is the one of the largest software makers by revenue, second only to Microsoft.
It displays over 420,000 customers and operates in more than 145 countries in a variety of segments. The company’s core business lies in an integrated stack of business hardware and software systems, part of which are cloud based.
The deal faced intense scrutiny due to the fact that Larry Ellison, Oracle’s founder, owns approximately 39.5% of NetSuite’s common stock due to an early stage funding of the company in 1999. Both companies established independent committees to review the deal from the perspective of independent shareholders to prevent the obvious conflict of interest. The committees agreed that the deal would have been brought forward only if the majority of NetSuite shares not held by Mr. Ellison and his family approve the transaction.
T. Rowe, an investment firm and NetSuite’s largest institutional shareholder informed Oracle’s board that it would have tendered its shares in favour of the deal if the software giant boosted its bid to $133 a share. The investment firm held 14.4 million NetSuite shares, or 17.7% of the company’s outstanding stock, as of the start of November. Oracle Chief Executive Mark Hurd told CNBC that the company’s $109-a-share bid is its “best and final offer.” The threat to pull out of the deal eventually made the 53% of investors prone to favour the deal.
The acquisition will add close to $1bn to Oracle’s sales from cloud services. NetSuite’s customers have been early adopters of the cloud and represent potential current and future buyers of Oracle’s entire range of services. Oracle indeed intends to utilize its leading cloud capabilities to help NetSuite’s customers grow their businesses faster and more profitably.
The company’s representatives say that Oracle and NetSuite cloud applications are complementary rather than substitutes. Oracle plans to invest heavily in both the engineering and the distribution of the combined services, leveraging on its global reach to make available its expanded products in more countries and industries.
Alessandro Saldutti
Both companies provide business applications that help automate operations in various areas, mainly finance and human resources, which are collectively called enterprise-resource planning (ERP).
The deal values NetSuite at $109 a share, a 21% premium with respect to NetSuite’s Friday 4th November closing at $90.34 per share.
The NetSuite’s acquisition will boost Oracle’s cloud-computing offerings, a market segment where the company has been struggling and is racing to expand its services. Furthermore, Oracle expects the acquisition will enable the company to support customers of any size in more industries and more countries.
Listed on the New York Stock Exchange (NYSE: N), NetSuite became a public company in 2007 and has now a market cap of 7.360.
In 1998, NetSuite pioneered the Cloud Computing revolution, establishing the world’s first company dedicated to delivering business applications over the Internet. Today, NetSuite provides a suite of cloud-based services generally grouped under the name of Enterprise Resource Planning (ERP) that run the business of more than 30,000 institutions in more than one hundred countries. It is indeed the global leading provider of cloud-based business management software.
Also listed on the New York Stock Exchange Oracle Corporation is a large player in the computer technology business. With a current market capitalization of $47.3Bn Oracle is the one of the largest software makers by revenue, second only to Microsoft.
It displays over 420,000 customers and operates in more than 145 countries in a variety of segments. The company’s core business lies in an integrated stack of business hardware and software systems, part of which are cloud based.
The deal faced intense scrutiny due to the fact that Larry Ellison, Oracle’s founder, owns approximately 39.5% of NetSuite’s common stock due to an early stage funding of the company in 1999. Both companies established independent committees to review the deal from the perspective of independent shareholders to prevent the obvious conflict of interest. The committees agreed that the deal would have been brought forward only if the majority of NetSuite shares not held by Mr. Ellison and his family approve the transaction.
T. Rowe, an investment firm and NetSuite’s largest institutional shareholder informed Oracle’s board that it would have tendered its shares in favour of the deal if the software giant boosted its bid to $133 a share. The investment firm held 14.4 million NetSuite shares, or 17.7% of the company’s outstanding stock, as of the start of November. Oracle Chief Executive Mark Hurd told CNBC that the company’s $109-a-share bid is its “best and final offer.” The threat to pull out of the deal eventually made the 53% of investors prone to favour the deal.
The acquisition will add close to $1bn to Oracle’s sales from cloud services. NetSuite’s customers have been early adopters of the cloud and represent potential current and future buyers of Oracle’s entire range of services. Oracle indeed intends to utilize its leading cloud capabilities to help NetSuite’s customers grow their businesses faster and more profitably.
The company’s representatives say that Oracle and NetSuite cloud applications are complementary rather than substitutes. Oracle plans to invest heavily in both the engineering and the distribution of the combined services, leveraging on its global reach to make available its expanded products in more countries and industries.
Alessandro Saldutti